Wednesday, July 6, 2011

Hot Water Tanks: Tankless vs. Traditional

When we purchased our home in 2007, there was an old 80 gallon hot water tank that came with the house.   Originally, it wasn’t working, but Todd was able to fix it for $40 and it’s been running fine every since.

I have wanted to replace this hot water tank because we have no need for an 80 gallon tank and I believe that it is using a lot of electricity.  It has been said that a previous owner of the home had a beauty salon on the one side of the house in which she needed such a large hot water tank.  That’s fine and dandy, but we don’t need or even want it for our one bathroom home.

Todd and I have gone back and forth about buying a tankless vs. traditional water heater over the past two years.  This weekend, we finally made our decision: We are purchasing a traditional hot water tank.

I would love to get our home to be as efficient as possible, and from what I had read, we thought the tankless would be the way to go.  We were never able to find anything online showing exactly how much (or little) electricity a tankless water tank uses versus the traditional.  We found out from Lowe’s this weekend that an electric tankless water heater has an EnergyStar rate of $485/year whereas a 40 gallon hot water tank has a rate of $508/year in electricity!  There really isn’t much difference!

The cost for the tankless to be able to provide our home with enough hot water is $495 versus $203* for the traditional 40 gallon hot water tank.  The difference in cost is $292 for the tank alone.

How many years would it take to break even?  12 ½ years!!!

I understand that a tankless only heats water as needed; however, at this point, we cannot justify the cost of putting in a tankless versus getting a smaller traditional water heater.  When it is time to replace the new water heater, we will go through the process again to determine which is better for our home**. 

If you have a tankless/point-of-use water heater, that is awesome!  My hope is that one day we will be able to install a tankless water heater when the efficiency is more noticeable versus the traditional water heater. 

If you have any additional information or comments that you feel we need to take into consideration before purchasing our traditional water heater, I’d love to hear them! 

*The water tank we are looking at has a 6 year warranty.  We could pay an additional $120 for one that has a 9 year warranty, but I have a handy hubby.  He can fix just about anything.

**Please note: a natural gas tankless water heater uses less electricity; however, we do not have natural gas where we live.  If you do, tankless may be the way to go!


  1. We have natural gas here, but it turned out to be cheaper to replace our tank with a regular tank again. We have very hard water, and we learned from the man at Lowe's that the tankless water heaters die out here only a year after a regular water heater, because of the extremely hard water. It wasn't worth the extra cost when we did the math.

  2. Out water is awful here too. That is great to know - thank you!!!

  3. What about power outage? During times when there is no electric to power a water pump, water from the tank can be used- and it's clean water. Just wondering your thoughts on this.

  4. My sister had once bought a tankless but got it replaced finding out to late that they don't use the hot water enough to make it heat the water. they would go though a whole shower before it was hot. you need to use so much water to make it useful.

  5. I never would have thought about the water tank in case of power outage! Great idea!

    Marnita, that is great to know and keep in mind if we decide to look into a tankless again in the future! :-) Thank you!

    All great comments. Good thing we are still heavily leaning toward the traditional. We will not be purchasing it for another few weeks.

    Thank you for the great points!

  6. Great post Meg. I always thought tankless was the way to go, but it's kind of like our washer situation. The front load high efficiency ones aren't all they're cracked up to be either.

    Consumers beware... things aren't always what they seem.

  7. We also have a traditional hot water tank at home. Considering the importance of a water heater in every home, it is only logical to compare the difference in operating costs between a tankless and traditional hot water tank.